Startup Seeking Your Advice!

[tbeer22]

My startup is in the process of adding people to our team. We are hiring programmer(s) as intern(s) and have agreed on having them work for free, but I'm having trouble trying to figure out how I can allow them to earn equity (sweat equity) for their hardwork this summer.

Does anybody have any advice, or resources that can help me figure out how to legally offer a promise of ownership in our company for completed and continuous hardwork?

(term sheet? LIO? HELP PLEASE!)

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[entrepreneur74]

How old is your startup? Have you started generating revenue yet? Free is good, but as an entrepreneur are you certain that you want to start giving fractional ownership in your company away? For programming and technical type work, have you considered hiring a Virtual Assistant? I have worked with companies to set up ESOPs and stock grant/option programs and can lend some advice pertaining to this. What kind of corporate structure are you presently operating under (LLC, C-Corp, S-Corp, Partnership, so on)?

[Mikeman56]

I agree....I would think about it before you start giving away parts of your start up

[Garry.Cooper]

I agree on not offering equity initially. You should reserve this for yourself and your core team who’ve helped you build your business.

You could try banking their hours; they work for you now, you keep track of their hours and agree to pay them upon a liquidity event.

-Garry

[loanlive0]

I agree with them.. I can see that you want to give them reward for their hard work..But think about it..

[Iamnotsatisfied]

Yh just give them sweat equity.... Oh yh don't forget to give the postman some sweat equity too and that friend who said he would help you as well.

Do just that and you won't last long as a startup

Give out too much equity; you'll end up having nothing left for your self or core people you want to recruit later.

Then you'll have nothing to work for. You will soon lose your motivation and just give up.

I'm far from a business expert as I'm in the startup stage as well ... but IMO I don't believe that's a good idea.


Do what the guys above me said.. Bank their hours and then pay them when you can if you can't at the moment.

Or pay them in favours.... Try and reccommend them to another employer and get them a job that way. I don't know... Just a random idea that's better than giving out a part of your company when it's not needed.

Only one of our developers has a share in the business, but he was with us since the start and is more than just a programmer as he manages the other devs I employ and helps with the marketing.